Israel innovation makes up half of Merck healthcare revenue, top official says

Israeli innovation is behind almost half of the healthcare revenues of the 350-year-old German pharmaceutical and chemicals firm Merck, Kai Beckmann, CEO of Performance Materials at the firm, said in an interview on Tuesday.

“Roughly almost half of (our) healthcare revenue is based on innovation stemming from Israel,” Beckmann said. “This tells us a lot of the story of how important” Israel is to Merck.

The Rebif drug marketed by Merck to help decrease the frequency of relapse symptoms of multiple sclerosis had sales of some 1.7 billion euros in 2016, while the Erbitux drug for patients with cancer of the head and neck, also based on Israeli technology, had global sales of around €1 billion, he said.

Merck’s range of products includes biopharmaceutical therapies for cancer and MS, and liquid crystals for smartphones and LCD televisions. The founding family remains the majority owner of the publicly listed corporate group, which was established in 1668.

Beckmann spoke with The Times of Israel as the German giant, which employs 52,000 employees globally and had total sales of €15 billion in 2016, inaugurated on Tuesday a new technology innovation laboratory at its subsidiary, Qlight Nanotech in Jerusalem, which it bought in mid-2015 to boost its expertise in liquid crystal display materials and OLED materials.

The lab, situated at the Hebrew University’s Edmund J. Safra Campus, will be doing innovative quantum materials research for Merck by tapping into its own pool of researchers and those at other universities in Israel as well.

Merck has been active in Israel for over 50 years, employing more than 300 people, mainly scientists. The firm has research sites and technologies incubators in Yavne, Herzliya, Rehovot and Jerusalem. All three of its business sectors, healthcare, life science and performance materials, have R&D sites in Israel.

The performance materials sector is Merck’s smallest sector, said Beckmann, with €2.5 billion in revenues in 2016, but its most profitable, he said.

The Merck family, which holds 70 percent of the firm, sees the three sectors as a way to diversify their activities and lower risk. “In performance materials we are a specialty player that is active in all kinds of high-tech industries,” Beckmann said, including LED displays, quantum materials, automotive paint pigments and surface solutions.

Qlight Nanotech is a materials firm that makes nanocrystal display technology that enhances the color of display screens. The company was spun off from research at the Hebrew University of Jerusalem and brought to market by Yissum, the Hebrew University tech transfer company.

Qlight focuses its research and development on cadmium-free quantum materials for use in display applications. Quantum materials are nanosized particles which enable displays with a substantially extended color gamut. Qlight’s work is tightly integrated into global projects, working closely with Merck teams in Germany and Japan.

Merck bought Qlight looking to expand its development efforts in nanotechnologies and materials. The new lab will expand Qlight’s facilities and the number of researchers it hosts has grown from 16 in 2015 to 20 today. They will focus on new developments in the quantum materials sphere.

“This lab will intensify all our work in quantum materials,” Beckmann said. “People working here are doing research on new materials, improving displays.”

Beckmann has led the performance materials sector at Merck since September. He began his career at the firm in 1989 as an IT system consultant.

Israel and Merck are a ‘good fit’

Beckmann believes that close collaboration with Israel will continue to be beneficial to both parties.

“You need great ideas and inventions, but you need then the energy and the stamina to drive these inventions into real products,” he said. “Our collaboration has deep roots,” he added.

And as Merck and Israel “celebrate 50 years of engagement,” Israel will continue to play a strong role, he said.

Israel is a place “which is extremely dynamic into tapping into new fields and that is fascinating for me, how active Israel always was and still is and continues to be in new technologies,” he said. “There seems to be continuous ambition to always move a step ahead, and that is something that is pretty much aligned with our ambition. And that is why we are such a good fit.”

There are actually two separate companies called Merck; the German Merck and the US-Canadian pharmaceutical firm Merck, which is an independent company spun off of the German firm.

The German Merck has been active in Israel since 1978. The company set up an incubator in Israel called PMatX, in August, to support startup companies specializing in materials and manufacturing technologies. The program is supported by additional partners including HP of Palo Alto, California, and US-based global investment firm Battery Ventures. The program has a budget of €20 million and will run initially for three years.

The new incubator http://www.hp.com/is located at Merck’s research & development site in Yavne, Israel, which also is home to Merck’s already existing healthcare and life science incubator, BioIncubator. This initiative was started in 2011 and has committed to invest up to €10 million through this year in biomedical-focused startup companies in Israel. Since its inception, four startups have been funded: ChanBio, Neviah Genomics, ARTSaVit and Metabomed.